or Email me to sign up as private exclusive subscriber : tradeview101@gmail.com_____________________________________________________________________________

In conjunction with Chinese New Year, our team would like to share a perspective on looking at businesses from a different lens. We would like to take the opportunity in this new year to talk about Ancient Chinese Philosophy and analysing certain aspects of the corporate world.

As one of the oldest civilizations in the world, and with the largest population, China has produced internationally known statesmen, philosophers, thinkers, and leaders; yet we see so little on Chinese leadership or management philosophy by Chinese scholar. This is not until recent years; the Chinese economy has become a major driver of global growth and a shaper of global markets that people start to pay attention to the possibility of ancient Chinese philosophy may be a valuable source of inspiration for contemporary management and business strategy.

There are many Chinese philosophies and ideologies such as Daoism, Legalism, and the Art of war appreciate by many business leaders, they reflect that their business value and their decision-making foundation to regulate with the vagaries of challenges are shaped by ancient Chinese philosophies. One of the world’s richest and most influential men, Mr. Li Ka Shing emphasized in his recent interview, the importance of check and balance in business methodology that can be achieved by using western management model with Confucian school of thought as internal philosophy, and he has proven that it works well by the success of his business. Feel free to watch bloomberg video interview of Li Ka Shing as source of reference.

Today we will discuss a well-known Chinese teaching by Meng Zi also known as Mencius, with the aspiration of “he who rules the world that has the hearts of the populace”. (得人心者得天下)

The inspiration for Meng Zi to come out with this quote is from his observation on; those kings, who know the needs of the people, try his best to provide to those needs and are kind to his people will eventually win the crown. Vice versa, those rule by fear will be overthrown if aforementioned leaders rise among peasant. In Meng Zi’s archive, he discussed two kings, Jie and Zhou. He noticed that those failed Kings share some similarity in their characteristic; both are extremely intelligent and rich, however, they egoistically assumed that with their vast knowledge, skill, financial power, and reputation, they were invincible, thus did not appreciate the talents and ignore ideas and feedback from his trustee. They were blinded by their success and enjoyment and couldn’t see that people of the land living in misery. They ruled by injecting fears to the people and suppressing resistance by administering cruel punishment.

Predictably, people could no longer bear with this leadership style and turn to another leader. Meng Zi concluded that, in order to become a successful leader, one must be recognized by the followers, to be recognized by the follower, the leader must understand the needs of the follower and fulfill them. By doing so, trust and support of the people will be earned.

When it comes to Politics, there is no doubt the above age old wisdom is applicable throughout. Good world leaders are few and far between, if there is, usually they wont last. Hence, Machiavellianism and Utilitarianism have often been the preference of most leaders be it in the political or business world. It is very careless for mankind to fall into the slippery slope of contemplating end goals as means to justifying their actions when philosophy should be the guiding principle in running a country or company.

At Tradeview, we are apolitical. Hence, we will only look at things from the perspective of businesses. If we look at some of the best business leaders today, few names are truly respectable. From the western world, there is the likes of Mr. Warren Buffet, Mr. Ingvrad Kamprad and from the east there is Mr. Li Ka Shing, Mr Robert Kuok.

If you notice, there will always be some similarities between the above titans of the industry. Firstly, they rarely come by, possibly once in a generation. It will take decades before the next one comes along. Secondly, they are usually there for a very long time (sustainable and consistent). Thirdly, they are usually humble, low profile, never flashy and always grounded. Fourthly, they are usually at the helm of their company, involve in day to day business operations even at an advance age, personally attending to issues and overlooking the business - in short tireless work ethic and always hardworking. The list can go on but if you were to ask anyone on the street, most would agree, if we were to invest in any of these companies held by the above mentioned business leaders back 30-40 years, we would be sitting on huge amount of wealth to last a a lifetime.

The sad thing today is the generation only looks to instant gratification and fast returns without any basis. Without actual fundamentals to back any of the investment thesis, people will blindly follow the herd and crowd. When we invest our hard earn money, we should always ask ourselves, how many plates or bowl of noodles one has to sell in order to make this much money over a duration of time? If we ask ourselves such questions, we would tend to be more careful before simply putting our money behind a company just because our friends told us to do so.

Case in point No. 1 - Bitcoin. Many months back, we had lots of readers and subscribers asking us about Bitcoin and if Tradeview would recommend buying. We have maintained the same position from Day 1 until present, how do you value something that has no intrinsic value? How do you assess the fundamental viability and worthiness of the item? Isnt it just a bubble and Ponzi scheme waiting to burst? In order to not offend those who invested, we just answer, we do not invest in things we do not understand. This is not an "I told you so", but a form of discussion. Hindsight is always 20/20. Fact is, we know the value of Bitcoin and other cryptocurrency lies in the Blockchain Technology, not the cyrptocurrency itself. Hence, it is always important to know what one should invest in.

Bitcoin few months back vs Today

Case in point No. 2 - MLM. MLM has existed a long long time. Since the Tupperware parties days in 1950 or Avon cosmetic products until present day. This is a sensitive topic as we know many have different views when it comes to MLM. Supporters think it is a Godsent which help provides livelihood and sustenance. Dissenters think it is a scam which monetises personal relationship, erodes the ethics of hard work, stifle creativity and ingenuity etc. There are many successful MLM companies today that is still doing well such as Tupperware, Amway, Coway and others. Equally, the number of MLM scams are abundant. One thing to note, we acknowledge MLM as a form of efficient business model but we do not recognise MLM as creating value for society or being a part of it equates to entrepreneurship. Everyone throws the word of entrepreneurship around just because it is "sexy" but how many truly understand the concept of building business or creating value? MLM supporters often adopts campaigns and large scale conferences to show a collective front and efficiently using the herd mentality to convince, motivate, propagate to new joiners and members them to be part of the movement. We will save this topic for another day but we hope that young minds will focus their energy, capability and creativity on truly building businesses and creating value instead of rushing in for the quick gratification of short term monetary gains and lose out on meaningful long term goals in life.

A very wise business leader of one of the blue chip company in Malaysia once told me, the key to sustaining a company is the "Value". Only the right company's value can ensure the it survives the test of time. An example would be Mitsui Fudosan, which has been around for over 300 years. The current business leaders of Mitsui attributes their success to the "value of the leader or founder".

Whenever new readers ask Tradeview about our investment philosophy, we always say we focus on the Fundamental Analysis as the key and Technical Analysis as guide. What we seldom share is our strength is the ability to analyse and dissect a company beyond the financial records. We look into the business itself and the people behind the business before we come to a conclusion whether to proceed to put our money behind the investment. If the numbers adds up but we do not like the business leader or management team, no matter how enticing, we will skip. However, if the business leader or management team displays an extraordinary grit, charisma, work ethic, value and brilliance, we would focus our attention and monitor the company very closely. In a nutshell, we should always assess businesses on the following 1. business model, 2. nature, 3. business leader, 4. management team, 5. company's philosophy, values & principle.

PS: We would like to share the credit of this article with the writer, a brilliant up and and coming consultant who first wrote an article Titled : Ancient Chinese Philosophy as a Source of Inspiration for Talent Management / Leadership Management. For those who understands Mandarin, can read the following.

or Email me to sign up as private exclusive subscriber : tradeview101@gmail.com_____________________________________________________________________________

Value Pick No. 1:QL Resources Bhd. (Initial Valuation RM 5)

QL Resources Bhd is one of our favourite back in 2015. When we called it at RM 2.40, we had a TP of RM 3.50 in mind. As it continued to be one of the Forbes best under billion company in Malaysia, we held on with a max FV of RM 4.30. We fully disposed at RM 4.30 in 2016. The key reason being the growth was stagnant. Their poultry, egg was doing alright but not great. The surimi business division is still the biggest contributor to the group. While we still had confidence in the company, especially under the stewardship of Chia Song Kun along with the other founding family members, there was a growth issue which indicates QL did not matter warrant the premium valuation with over 25x trailing PE.

Entering 2018, we decided to initiate on QL once again. This is not because the lack of ideas but rather because the growth story and trajectory has appeared in this family run business. In fact, the growth story is so enticing we should have noticed earlier. 2 words - Family Mart. Why is Family Mart such a game changer? Usually analyst do not like it when a company diversify their business into areas not related to the core business. Two reason behind it - 1. It shows the lack of confidence in the existing core business 2. The company may have to assume certain risk in entering new business / industry. This was also one of our early hesitance. However, as of today, our doubts were all clear.

A simple question to ask is would you enter a 7-11 or Family Mart if it was side by side? Additionally, the small snack / food segment of Family Mart is booming. Attracting crowds of all age. Their onigiri, green tea ice cream and curry balls. Of course if we were to share QL based on these alone, we are sure we will be severely criticised. So let’s go into the financial metrics and business side of things.

If you look at the past 5 year chart, it is obvious that QL have been performing consistently with both revenue and profit growing steadily. Of course, it would appear it reached a stagnant between 2015 to 2017. However, on the back of their expansion with the Family Mart business, things are looking to improve. Usually businesses diversification takes a longer time to reap fruits but the quick expansion abundant in retail lot supplies and low rental environment, it would appear that QL would be moving into profit territory quickly.

If we annualise the first 2Q of 2018, it would seem that QL may be able to achieve Rm3 billion in revenue + RM200 million in profits. Both are extremely good thresholds to break and it will only grow further in the coming years. Additionally, last year QL further declared a special dividend bringing the year dividend to 7.25 sens close to their record year. While the DY is not great, for the coming year, I will be more optimistic especially if Family Mart break evens. Additionally, a company that rewards shareholders albeit it is still expanding its business is better than a company that refuse to reward shareholders under the guise of expanding the business. Many good companies that are expanding even after doing well refuse to reward shareholders, QL management has maintained a consistent Dividend Policy through out the years.

This brings me to the next point, investing in QL is a also a valuation play. How so? Traditionally, QL has been valued as a poultry, surimi and feed company. Now with their convenience store business, their valuation will alter. This would be especially true if they can win market share from 7-11 or MyNews. If you look at both companies' valuation, you will be amaze with the premium attached to both companies. SEM (7-11 Malaysia) is trading at 43x trailing PER and MyNews is trading at 40x trailing PER. QL is only trading at 34x PER with an expanding convenience store business arm. Hence, to us, QL is a very solid mid to long term valuation play.We would like to point out to all, another interesting business that was given premium valuation for a similar business model. Jaya Grocer reported a profit after tax of RM1.05mil on the back of a revenue of RM283.08mil for its FY14 ended June 30. This gives it a profit after tax margin of a mere 0.37%. The company has total assets of RM77.87mil. Jaya Grocer will be paid RM300mil for the grocery chain, valuing the entity at more than 30 times the price-earnings ratio (PER). It started in 2007 with its first outlet in Jaya 33 in Petaling Jaya. It has 16 outlets located mainly in the Klang Valley including The Intermark, Empire Shopping Gallery and KLIA2. The reason we are sharing this is to indicate the valuation of grocery chain vs Family Mart. Although Family Mart business model would be more like 7-11, you can benchmark the business valuation to get an indicative value with discounts / premiums for store fronts and inventories. The similarity is the cash business and so long the cash flow management is strong, it will be a valuable gem.https://www.thestar.com.my/business/business-news/2016/05/11/jaya-grocer-chain-sold-for-rm300mil/Our initial valuation for QL will be RM5 based on the back of 12.65 EPS at 40x trailing PER. This is our prudent estimation without taking into account of the growth of the other businesses within the group. For those who likes a solid management, boring but fundamental business with a expansion horizon, can consider QL.

Looking at the time stamp, it is very obvious as one of the earliest writers in 2016 to call a recovery of export stocks and O&G. We called it when it was only March 2016, when these few sectors were at its worst.

1. Most export counters plunge like Liihen plunge to RM1.65 and Pohuat plunge to around RM1.35,

2. Oil Price was at USD 36.79 per barrel for crude oil,

Fast forward to last week of 2017 :

1. Liihen rebounded from RM1.65 to now RM3.63 (Year high RM4.30) and Pohuat rebounded from RM1.35 to now RM1.80 (Year high of RM2.06)

2. Oil Price is at USD 65 per barrel for crude oil (Petronm, Serba Dinamik, Hengyuan among those that rebounded fiercely)

Our stance is to advise all against looking short term. Focus on the long term view and ignore short term volatility and noises. Similarly, 2017 was a tough year. We believe that 2018 will be slightly better. The optimistic side of us would like to think so at least. For those who like to cherry pick at the bottom, there are certain sectors to consider as well at current climate.

We will follow up with another article soon to review our Top 5 Investment Sector Calls for 2017 to reflect how our view has materialised over the course of the year. This way we can look forward to 2018 with more clarity.

Saturday, 9 December 2017

Dear fellow traders / investors,This is the last monthly report card of Tradeview 2017 Public Portfolio. We would like to thank all readers for the support shown through out the whole year. It has been a very strange year but a good one nonetheless. We are thankful for many things, amongst which the steady growth in readership and support by your good selves. We will write a few concluding articles for 2017. Do keep a look out for our post.

Moving into 2018, we will be continuing the practice of recording my calls for the public. The purpose is for transparency and accountability. This is the updated results as of early December.

This is just a simple periodical report to keep track of the progress of my picks for readers. Feel free to cross check my public comments / article posting date as reference for the calls. Some are calls, some are articles on value picks but all are documented.

*** In fairness, I excluded Magni and Yee Lee as both were 2016 Value Picks & MFCB and Jaks as called Nov / Dec 2016

As of now, it is 7/11 winners against losers. Should you are keen to follow my trades, there are 4 ways to follow Tradeview Group. I usually share my calls with :

1. Private Exclusive Subscribers first

2. Website / Blog / Facebook second

3. Telegram Public Channel third

4. Forum last

If you are keen to have the earliest possible call picks or FA/TA coaching or value investing guidance or to be private exclusive subscriber, feel free to contact me at tradeview101@gmail.com to sign up. Thanks.

Regards,

Tradeview

**Some counters I may have spotted at lower entry price but I displayed the call price based on my first mention in public forums. Also, of all the counters above, some counters I have taken profit, some are still holding, some I have cut loss. My private subscribers would know.

Thursday, 19 October 2017

As in the past years, I will be continuing the practice of recording my calls for the public. The report will show the monthly record for year 2017. The purpose is for transparency and accountability. This is the updated results as of end of Sept.

This is just a simple periodical report to keep track of the progress of my picks for readers. Feel free to cross check my public comments / article posting date as reference for the calls. Some are calls, some are articles on value picks but all are documented.

*** In fairness, I excluded Magni and Yee Lee as both were 2016 Value Picks & MFCB and Jaks as called Nov / Dec 2016

As of now, it is 8/11 winners against losers. Should you are keen to follow my trades, there are 4 ways to follow Tradeview Group. I usually share my calls with :

1. Private Exclusive Subscribers first

2. Website / Blog / Facebook second

3. Telegram Public Channel third

4. Forum last

If you are keen to have the earliest possible call picks or FA/TA coaching or value investing guidance or to be private exclusive subscriber, feel free to contact me at tradeview101@gmail.com to sign up. Thanks.

Regards,

Tradeview

**Some counters I may have spotted at lower entry price but I displayed the call price based on my first mention in public forums. Also, of all the counters above, some counters I have taken profit, some are still holding, some I have cut loss. My private subscribers would know.

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Specialising in Value Investing and Fundamental Analysis. The philosophy and guiding principle is "Trading With A View". The areas of focus includes equities, forex, property and global economics.
Genuinely believe in investment as the way to achieve financial freedom and sustenance. As a professional in the Corporate Real Estate and M&A industry, was involved in negotiating and closing mega deals. Understand the importance of chasing corporate targets whilst realising the importance of self sustenance. Let us exchange ideas and work towards our financial goals.
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